Auto Brands For Sale - Which Will Make It?

[jyl]

The world's unwanted automotive brands are being sold off, and so far most of them have found buyers.

Saturn (or at least Saturn excluding its assembly plants) will be sold to PAG, a large auto dealership chain.

Under the terms of the MOU, if the transaction is completed, Penske Automotive Group would obtain the rights to the Saturn brand, acquire certain assets including the Saturn parts inventory, and have the right to distribute vehicles and parts through the Saturn Dealership network. General Motors would continue to provide Saturn Aura, Vue and Outlook vehicles, on a contract basis, for an interim period.

Hummer will be sold to Sichuan Tengzhong Heavy Industrial Machinery Co (a Chinese truck/machinery maker). Although, this needs Chinese govt approval.

Opel will be sold to a consortium of the Russian govt (via a govt-owned bank) and MGA (a tier 1 parts supplier), with part ownership by GM. Other bidders, Fiat and a Chinese auto OEM, are out there but I think the decision is made.

Saab is apparently considering alternative bids by Koenigsegg (a niche vehicle builder), Renco (an investment company), and Fiat (unclear how interested Fiat really is).

Jaguar and Land Rover were bought by Tata Motors of India, that is older news.

Volvo is for sale, bidders undisclosed, probably includes Geeley (Chinese automaker).

Which do you think will make it? Why?

Edit: To be clear - this thread isn't meant to be about F or GM or Toyota or the other major OEMs. I'm trying to focus on the brands that have changed hands.

[cgarr]

Ford, next question.

[juanbenae]

i read this AM roger penske is discussing buying saturn

[legion]

Hmmm....Saturn is a valuable property. It is highly profitable for dealerships but wasn't so much for GM. I'd love to see more cars like the Sky and maybe a Corvette killer from Saturn. Penske could race his own cars in ALMS and Rolex! (And maybe even a Saturn in NASCAR.) Of course, he'd need a lineup of sub-performance cars to pay the bills and pass emissions standards. This is an interesting development. Maybe win on Sunday, sell on Monday is back!

Of all the bidders for Saab, I'd like to see Koenigsegg get them the most. GM was moving Saab in the right direction (as an alternative to BMW). But not nearly fast enough nor with the commitment required.

[the]

Hummer, Opel, Jaguar and Land Rover will "make it." Because all they really are is brand names and identities, which have value.

Unlike names like Pontiac, which is really just a GM nameplate with little or no value.

Saab and Volvo are similar, but as brand names/identities IMO have less value than the other 4. Volvo has some value in that they are more diversified with trucks and commercial vehicles, and have managed somehow to create a perception that "because our cars are so boxy, slow and ugly, we MUST be safer than a BMW or Mercedes."

I think they are less clear than the other 4, but will survive. I think they would be a good pickup for a Chinese company like Geeley. It gives them what they need - a name people recognize. It's a unique situation, because as a standalone independent company, Volvo could never be a profitable company, and I don't think it ever could be profitable being run by a big US automaker. But a Chinese company, maybe.

I don't think Saab will be around 15 years from now. They were another company that has long been a dead man walking, only able to survive as a brand by being a parasite on a larger company. But by being a parasite, their brand has been so diluted, they lost a lot of their former loyal, quirky customers, who knew better than to buy rebadged GM stuff like the 9-7, or the other models which have had GM input.

[kaisen]

Originally Posted by car 311

i read this AM roger penske is discussing buying saturn

PAG = Penske Auto Group

[legion]

Volvo, like Rolls Royce, is really two, unrelated companies.

Volvo sold the rights to the Volvo nameplate for cars to Ford some years ago. The truck operatons now have nothing to do with the cars.

Similarly, Roll Royce automotive operations were sold to (BMW?), but their is still a Rolls Royce aircraft company...

[jyl]

Note that PAG (Penske Auto Group) appears to be buying Saturn's brand, 350 dealership network, parts inventory, and an interim agreement for GM to supply existing Saturn vehicles. PAG is not buying Saturn's assembly plants or design operations, and will have no ability to actually design and build anything.

It appears PAG will rely on GM to supply vehicles for a period, while seeking additional sources of vehicles.

[tcar]

Originally Posted by jyl

Note that PAG (Penske Auto Group) appears to be buying Saturn's brand, 350 dealership network, parts inventory, and an interim agreement for GM to supply existing Saturn vehicles. PAG is not buying Saturn's assembly plants or design operations, and will have no ability to actually design and build anything.

It appears PAG will rely on GM to supply vehicles for a period, while seeking additional sources of vehicles.

From Opel maybe? Several Saturns are basically Opels anyway. I'm betting that Roger (Penske) has a "PLAN".

[jyl]

Is it a plan to be an independent auto brand, or to be a more valuable acquisition for another auto company - say, a Chinese OEM seeking to enter the US market?

[pwd72s]

With Penske involved, I have more hope for Saturn than I do for GM itself...

[jyl]

You mean Tuxing (Chinese for Saturn) . . .

[jyl]

I think Opel makes it. Deep pockets (Russian bank/govt), auto industry expertise (Magna), political protection (Russian govt). And, the European operations of GM make a company with decent scale.

Hummer I think does not make it, with the current deal anyway. I'm not even convinced this deal goes through. The market for Hummers won't be near what it was in the free money/cheap gas days, and a Chinese Hummer will have marketing issues in the US. Not sure about the brand's potential in China.

[tabs]

Hmmm the Hummer is based upon a US military vehicle...maybe the Chinese will adapt it back to being a military vehicle that is SUITED to their needs....

[pwd72s]

The Chinese are buying the Civilian Hummer line...based on Chevrolet pickup platforms. The military Hummer remains USA...not made by GM.

[Pazuzu]

Originally Posted by tcar

From Opel maybe? Several Saturns are basically Opels anyway. I'm betting that Roger (Penske) has a "PLAN".

Build capital using the remaining inventory and selling off the few cars he can grab from GM for the next few years, while having a design team in the back room planning the Next Big Thing. If I had the cash laying around to buy Saturn I'd have to consider that route. It's gotta be easier to buy that nameplate now that to make an entirely new name in a few years, no matter how good your car design is.

[jluetjen]

I think that Roger may be ahead of the curve here. I've mentioned earlier that in the future I expect car companies to develop along what is known in the semiconductor industry as "fabless" or "fab-lite" model. Basically two levels of the automobile industry will develop:

1) The car companies themselves (such as Saturn in this case) which will design, develop and market cars.

2) Assembly foundries which will do contract manufacturing.

This sort of model will allow the consolidate the capital intensive manufacturing process to drive maximum utilization of the huge capital investments required. This will do a number of good things for each party.

For the "Foundry" companies: They will be able to diversify their customer base so that their volumes will not go up and down with the success of any one company. They will compete on the basis of assembly technology, quality and cost. The capital investments required for new assembly technologies will be able to be sold out to multiple car companies, thus reducing the payback time. Some companies may even introduce new components of their own. So a new V8 engine may show up in the products of multiple car companies.

For the "Auto" companies: They will be able to trim down their staffs and reduce their break-even point. They will no longer be distracted by the assembly technologies, but will focus on time-to-market and maximizing the value of their product for the customer. They will also be able to source the latest assembly technologies for their products from multiple foundry vendors.

The result will actually be a wider variety of cars for consumers to chose from, at lower prices.

I don't expect that Roger will keep Saturn tied to it's GM roots for long. Rather I bet you that he will shop for capacity at all of the existing factories. Expect Aston Martin, Lotus, Jaguar and the other "specialty brands" to follow suit. Companies like TVR will most likely also make a resurgence of sorts.

Personally, Saturn is the only GM product that my wife and I ever considered buying (back when they were Opel based). It was pretty much a toss-up between the Saturn and the Ford Contour. My wife picked the Contour (it was to be her primary car) because the performance was peppier then the Saturn. But it was close and both cars were were nice.

As far as I know, Saturn still has a very good reputation, especially among non-GM customers. I thought it was silly for GM to sell of Saturn and keep Buick. What's the difference between a Chevy and a Buick??? But then from GM's perspective it's most likely better to sell the brand while it's still worth something. Heavens knows that GM has not done a good job managing the value of that brand.

[Nine17]

Originally Posted by jyl

I think Opel makes it. Deep pockets (Russian bank/govt), auto industry expertise (Magna), political protection (Russian govt). And, the European operations of GM make a company with decent scale.

Opel builds just about everything Saturn sells, so it wouldn't surprise me if some of the money being used by Penske to buy Saturn comes from the Russian government and Magna. Most Americans wouldn't buy a Russian car under any circumstances but they'd buy a re-badged Hindustan Ambassador from Roger Penske. He's sold thousands of Smart Cars even though they don't make a whit of sense on American roads. Penske/Saturn makes a nice "beard" for a Russian-owned, Austro-Canadian operated, Opel to market cars in the U.S.

[bwell]

I think that Roger may be ahead of the curve here. I've mentioned earlier that in the future I expect car companies to develop along what is known in the semiconductor industry as "fabless" or "fab-lite" model. Basically two levels of the automobile industry will develop:

1) The car companies themselves (such as Saturn in this case) which will design, develop and market cars.

2) Assembly foundries which will do contract manufacturing.

This sort of model will allow the consolidate the capital intensive manufacturing process to drive maximum utilization of the huge capital investments required. This will do a number of good things for each party.

For the "Foundry" companies: They will be able to diversify their customer base so that their volumes will not go up and down with the success of any one company. They will compete on the basis of assembly technology, quality and cost. The capital investments required for new assembly technologies will be able to be sold out to multiple car companies, thus reducing the payback time. Some companies may even introduce new components of their own. So a new V8 engine may show up in the products of multiple car companies.

For the "Auto" companies: They will be able to trim down their staffs and reduce their break-even point. They will no longer be distracted by the assembly technologies, but will focus on time-to-market and maximizing the value of their product for the customer. They will also be able to source the latest assembly technologies for their products from multiple foundry vendors.

The result will actually be a wider variety of cars for consumers to chose from, at lower prices.

I don't expect that Roger will keep Saturn tied to it's GM roots for long. Rather I bet you that he will shop for capacity at all of the existing factories. Expect Aston Martin, Lotus, Jaguar and the other "specialty brands" to follow suit. Companies like TVR will most likely also make a resurgence of sorts.

Personally, Saturn is the only GM product that my wife and I ever considered buying (back when they were Opel based). It was pretty much a toss-up between the Saturn and the Ford Contour. My wife picked the Contour (it was to be her primary car) because the performance was peppier then the Saturn. But it was close and both cars were were nice.

As far as I know, Saturn still has a very good reputation, especially among non-GM customers. I thought it was silly for GM to sell of Saturn and keep Buick. What's the difference between a Chevy and a Buick??? But then from GM's perspective it's most likely better to sell the brand while it's still worth something. Heavens knows that GM has not done a good job managing the value of that brand.

I was thinking the same thing. Penske may just be the smartest guy in the room here. Make Saturn a design/marketing/sales operation and contract out the manufacturing.

With the tremendous excess manufacturing capacity out there, why maintain a factory and put up with the headaches of unions, legacy costs, etc?

The question is will the unions and their allies in the US Government let him get away with it?

[Dave L]

Originally Posted by jyl

Saab is apparently considering alternative bids by Koenigsegg (a niche vehicle builder), Renco (an investment company), and Fiat (unclear how interested Fiat really is).

My Saab is pretty much an impostor anyways so where do I buy Koenigsegg badges